WTO panel set up for U.S.-China auto dispute

Wednesday, October 24, 2012

At the request of the United States, the World Trade Organization has established a dispute settlement panel to address China’s imposition of antidumping and countervailing duties on U.S. automobiles.
The United States is challenging China’s imposition of duties allegedly because U.S. automobiles were subsidized and sold at less than fair value, or “dumped,” into the Chinese market. The Chinese duties affect more than $3 billion in exports of American-produced automobiles.
“We will not stand idly by while China misuses trade remedy procedures and puts American jobs at risk,” said U.S. Trade Representative Ron Kirk in a statement. “As we have demonstrated in numerous cases, we are serious about holding China accountable to its WTO commitments and ensuring that there is a level playing field for American workers and businesses.”
Shortly after President Obama decided in September 2009 to impose a safeguard measure against Chinese tire imports, China’s Ministry of Commerce announced it would initiate antidumping and countervailing duty investigations of imports of American-made cars and sport utility vehicles (SUVs). China’s Ministry of Commerce initiated those investigations two months later.
In May 2011, China’s Ministry of Commerce issued final determinations in which it found that imports of American-made automobiles had been sold at less than fair value into the Chinese market and had also benefited from subsidies. However, at that time, China suspended the imposition of duties.
Subsequently, in December 2011, China began imposing both antidumping and countervailing duties on imports of American-produced automobiles. The antidumping duties range from 2 percent to 8.9 percent, with an “all others” rate of 21.5 percent, and the countervailing duties range from 6.2 percent to 12.9 percent, with an “all others” rate of 12.9 percent. The specific products affected by the duties are American-produced cars and SUVs with an engine capacity of 2.5 liters or larger.
On July 5, after working closely with the U.S. Commerce Department and International Trade Commission to analyze China’s determinations, the United States requested consultations with China regarding China’s imposition of the duties. The United States believes that China failed to objectively examine the evidence and made unsupported findings of injury to China’s domestic industry. Consultations were held in Geneva on Aug. 23, but were unable to resolve the dispute.
“WTO rules permit China to impose duties on imports of merchandise that are subsidized or dumped – provided those imports cause injury to the domestic industry. But these rules also require WTO Members to follow specific procedures and apply defined legal standards when conducting the investigations that determine whether duties are warranted,” the Office of the U.S. Trade Representative said.
The U.S. panel request alleges that Chinese authorities failed to abide by applicable procedures and legal standards, including by finding injury to China's domestic industry without objectively examining the evidence, and by failing to adhere to various transparency and due process requirements.
This is the third time that the Obama administration has challenged China’s misuse of trade remedies at the WTO. In the first dispute, started in September 2010, the United States challenged China's imposition of antidumping and countervailing duties against U.S. exports of certain grain-oriented flat-rolled electrical steel products. The panel in that WTO dispute issued its report in July 2012, largely siding with the United States. China subsequently appealed, and the Appellate Body rejected China’s appeal in its entirety in October. In the other earlier dispute, commenced in September 2011, the United States is challenging China’s antidumping and countervailing duties against U.S. exports of chicken broiler products. Panel proceedings in that dispute are ongoing.